DISCONTINUED OPERATIONS

12 Months Ended

Jun. 30, 2017

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

DISCONTINUED OPERATIONS

On October 1, 2016, the Company completed the divestiture of four product categories to Coty, Inc. (“Coty”). The divestiture included 41 of the Company's beauty brands (“Beauty Brands”), including the global salon professional hair care and color, retail hair color, cosmetics and a majority of the fine fragrance businesses, along with select hair styling brands. The form of the divestiture transaction was a Reverse Morris Trust split-off, in which P&G shareholders were given the election to exchange their P&G shares for shares of a new corporation that held the Beauty Brands (Galleria Co.), and then immediately exchange those shares for Coty shares. The value P&G received in the transaction was $11.4 billion. The value was comprised of 105 million shares of common stock of the Company, which were tendered by shareholders of the Company and exchanged for the Galleria Co. shares, valued at approximately $9.4 billion, and the assumption of $1.9 billion of debt by Galleria Co. The shares tendered in the transaction were reflected as an addition to treasury stock and the cash received related to the debt assumed by Coty was reflected as an investing activity in the Consolidated Statement of Cash Flows. The Company recorded an after-tax gain on the final transaction of $5.3 billion, net of transaction and related costs.

Two of the fine fragrance brands, Dolce & Gabbana and Christina Aguilera, were excluded from the divestiture. These brands were subsequently divested at amounts that approximated their adjusted carrying values.

In February 2016, the Company completed the divestiture of its Batteries business to Berkshire Hathaway (BH) via a split transaction, in which the Company exchanged the Duracell Company, which the Company had infused with additional cash, to repurchase all 52.5 million shares of P&G stock owned by BH. During the fiscal year ended June 30, 2016, the Company recorded non-cash, before-tax goodwill and indefinite-lived asset impairment charges of $402 ($350 after tax), to reduce the Batteries carrying value to the total estimated proceeds based on the value of BH’s shares in P&G stock at the time of the impairment charges (see Note 4). The Company recorded an after-tax gain on the final transaction of $422 to reflect a subsequent increase in the final value of the BH’s shares in P&G stock. The total value of the transaction was $4.2 billion representing the value of the Duracell business and the cash infusion. The cash infusion of $1.7 billion was reflected as a purchase of treasury stock.

On July 31, 2014, the Company completed the divestiture of its Pet Care operations in North America, Latin America, and other selected countries to Mars, Incorporated (Mars) for $2.9 billion in an all-cash transaction. Under the terms of the agreement, Mars acquired our branded pet care products, our manufacturing sites in the United States and the majority of the employees working in the Pet Care business. The agreement included an option for Mars to acquire the Pet Care business in several additional countries, which was also completed in fiscal 2015. The European Union countries were not included in the agreement with Mars.

In December 2014, the Company completed the divestiture of its Pet Care operations in Western Europe to Spectrum Brands in an all-cash transaction. Under the terms of the agreement, Spectrum Brands acquired our branded pet care products, our manufacturing site in the Netherlands and the majority of the employees working in the Western Europe Pet Care business. The one-time after-tax impact of these transactions is not material.

In accordance with applicable accounting guidance for the disposal of long-lived assets, the results of the Beauty Brands, Batteries and Pet Care businesses are presented as discontinued operations and, as such, have been excluded from both continuing operations and segment results for all periods presented. Additionally, the Beauty Brands' balance sheet positions are presented as assets and liabilities held for sale in the Consolidated Balance Sheet as of June 30, 2016. The Beauty Brands were historically part of the Company's Beauty reportable segment. The Batteries business was historically part of the Company's Fabric & Home Care reportable segment. The Pet Care business was historically part of the Company's Health Care reportable segment.

On July 1, 2015, the Company adopted ASU 2014-08, which included new reporting and disclosure requirements for discontinued operations. The new requirements are effective for discontinued operations occurring on or after the adoption date, which includes the Beauty Brands divestiture. All other discontinued operations prior to July 1, 2015 are reported based on the previous disclosure requirements for discontinued operations, including the Batteries and Pet Care divestitures.

The following table summarizes Net earnings/(loss) from discontinued operations and reconciles to the Consolidated Statements of Earnings:

Years ended June 30	2017		2016		2015
Beauty Brands	$	5,217	$	336	$	643
Batteries	—		241		(1,835		)
Pet Care	—		—		49
Net earnings/(loss) from discontinued operations	$	5,217	$	577	$	(1,143	)

The following is selected financial information included in Net earnings/(loss) from discontinued operations for the Beauty Brands:

	Beauty Brands
Years ended June 30	2017				2016		2015
Net sales	$	1,159			$	4,910	$	5,530
Cost of products sold	450				1,621		1,820
Selling, general and administrative expense	783				2,763		2,969
Intangible asset impairment charges	—				48		—
Interest expense	14				32		—
Interest income	—				2		2
Other non-operating income/(loss), net	16				9		91
Earnings/(loss) from discontinued operations before income taxes	$	(72	)		$	457	$	834
Income taxes on discontinued operations	46				121		191
Gain on sale of business before income taxes	$	5,197			$	—	$	—
Income tax expense/(benefit) on sale of business	(138		)	(1)	—		—
Net earnings from discontinued operations	$	5,217			$	336	$	643

⁽¹⁾  The income tax benefit of the Beauty Brands divestiture represents the reversal of underlying deferred tax balances partially offset by current tax expense related to the transaction.

For the fiscal year ended June 30, 2017, the Beauty Brands incurred transition costs of $167, after-tax, which are included in the table above. For the fiscal year ended June 30, 2016, transition costs of $112, before-tax, were incurred and are included in Net earnings/(loss) from discontinued operations.

The following is selected financial information included in cash flows from discontinued operations for the Beauty Brands:

	Beauty Brands
Years ended June 30	2017			2016		2015
NON-CASH OPERATING ITEMS
Depreciation and amortization	$	24		$	106	$	125
Deferred income tax benefit	(649		)	—		—
Gain on sale of businesses	5,210			8		86
Goodwill and intangible asset impairment charges	—			48		—
Net increase in accrued taxes	93			—		—
CASH FLOWS FROM OPERATING ACTIVITIES
Cash taxes paid	$	418		$	—	$	—
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	$	38		$	114	$	106

The major components of assets and liabilities of the Beauty Brands held for sale are provided below.

	Beauty Brands
As of June 30	2016 (1)
Cash	$	40
Restricted cash	996		(2)
Accounts receivable	384
Inventories	494
Prepaid expenses and other current assets	126
Property, plant and equipment, net	629
Goodwill and intangible assets, net	4,411
Other noncurrent assets	105
Current assets held for sale	$	7,185
Accounts payable	$	148
Accrued and other liabilities	384
Noncurrent deferred tax liabilities	370
Long-term debt	996		(2)
Other noncurrent liabilities	445
Current liabilities held for sale	$	2,343

⁽¹⁾  The Company closed the Beauty Brands transaction in October 2016. Therefore, as of June 30, 2016, all assets and liabilities held for sale were reported as current assets and liabilities held for sale on the Consolidated Balance Sheets.

⁽²⁾  On January 26, 2016, Beauty Brands drew on its Term B loan of $1.0 billion. The proceeds were held in restricted cash in escrow until the legal integration activities prior to close. Beauty Brands received additional debt funding commitments with a consortium of lenders of $3.5 billion.

Following is selected financial information included in Net earnings/(loss) from discontinued operations for the Batteries and Pet Care businesses:

		Net Sales	Earnings Before Impairment Charges and Income Taxes	Impairment Charges		Income Tax (Expense)/Benefit		Gain/(Loss) on Sale Before Income Taxes		Income Tax (Expense)/Benefit on Sale			Net Earnings/(Loss) from Discontinued Operations
Batteries	2016	1,517	266	(402	)	(45	)	(288	)	710		(1)	241
	2015	2,226	479	(2,174	)	(140	)	—		—			(1,835	)
Pet Care	2016	—	—	—		—		—		—			—
	2015	251	—	—		(4	)	195		(142	)		49
Total	2016	1,517	266	(402	)	(45	)	(288	)	710		(1)	241
	2015	2,477	479	(2,174	)	(144	)	195		(142	)		(1,786	)

⁽¹⁾  The income tax benefit of the Batteries divestiture primarily represents the reversal of underlying deferred tax balances.